Why Hiring is Failing Us in 2024 (and What It’s Costing)

We’re halfway through 2024, and it’s clear—our hiring processes are broken. Despite advancements in technology and access to data, we’re still making costly hiring mistakes. According to SHRM, 75% of employers admit they’ve hired the wrong person this year. But why is this happening? The answer is simple: we’re stuck in outdated hiring practices that prioritize surface-level skills and interview performance over true team compatibility and values alignment.

What’s the Problem?

• We’re Not Building Teams Intentionally: Companies are focusing too much on hiring individuals who are great on paper but fail to consider how they fit into the broader team. A Harvard Business Review study found that 80% of employee turnover can be attributed to poor hiring decisions based on mismatches in team compatibility, rather than skill deficits. We’re hiring based on who looks good in a solo capacity, rather than thinking about how to create cohesive, complementary teams.
• We’re Not Using Data in the Hiring Process: Despite advancements in AI and analytics, many companies still rely on gut feelings during the hiring process. Research from Deloitte shows that 71% of organizations don’t use data to measure the success of their hiring strategies, which leads to poor decision-making. Without data, we’re missing out on insights about long-term performance, potential for growth, and team dynamics.
• We’re Ignoring Compatibility and Values Alignment: While it’s critical to find candidates with the right skills, ignoring cultural fit and values alignment is a recipe for disaster. According to a study by LinkedIn, 89% of hiring failures are due to poor culture fit, not a lack of skills. If we’re not assessing whether a candidate’s personal values align with the company’s, we’re setting both the candidate and the team up for failure.
• We’re Only Testing for Skills and Good Interviewing: We’re still asking the same old interview questions, focusing on how well candidates can answer rather than how well they’ll perform on the job. The interview process itself is flawed—46% of hires fail within the first 18 months because we’re only testing their interview skills and not looking for long-term potential, soft skills, or how well they’ll integrate into the team.

What Is It Costing Us?

The financial impact of bad hiring decisions is staggering. A report by CareerBuilder estimates that 74% of employers admit to having hired the wrong person, and these poor hires cost companies up to 50% of the person’s salary per bad hire. In addition to the direct costs, poor hiring leads to:

• Higher Turnover Rates: According to Gallup, companies with misaligned hiring practices experience 25-50% higher turnover.
• Reduced Team Performance: Mismatched hires can lower team productivity by 20-30% as team dynamics suffer from lack of compatibility and trust.
• Longer Time-to-Fill Rates: When the wrong person is hired, the recruitment cycle starts again, extending the time it takes to fill roles by up to 40%.

The Solution: Rethinking Our Approach to Hiring

• Intentionally Build Teams: Instead of just filling seats, leaders should think about how each new hire will complement and enhance the existing team. It’s about building teams with diverse skills, experiences, and perspectives that work together toward a common goal.
• Use Data to Guide Decisions: By using AI-driven hiring platforms and data analytics, companies can identify trends and predict long-term success. Tools like Instill Flow can assess how candidates will perform in real-time, providing deeper insights into cultural fit, team compatibility, and potential for growth.
• Focus on Values and Compatibility: Integrating values-alignment assessments into the hiring process will help ensure candidates are a match beyond their technical skills. A study by the Corporate Executive Board found that organizations with highly aligned values experience 30% lower turnover and see a 19% increase in employee engagement.
• Move Beyond the Traditional Interview: It’s time to retire the old interview format and start evaluating candidates on real-world scenarios, team collaboration, and soft skills. Incorporating tools that assess values alignment, emotional intelligence, and growth mindset can be game-changers for finding the right fit.

Action Steps for Leaders This Week:

1. Review Your Current Hiring Process: Are you still asking outdated questions? Revamp your interview process to assess soft skills, team compatibility, and cultural fit.
2. Run a Hiring Data Audit: What data are you using to inform your hiring decisions? If you’re not leveraging analytics, now is the time to start.
3. Observe Team Dynamics: Is your team thriving or struggling with cohesion? Assess whether recent hires are contributing positively to the overall dynamic, or if there’s a mismatch.
4. Implement a Values Alignment Check: Make sure every new candidate’s values align with your company culture to avoid misfits down the road.

Or, try Instill, we automate all of this for you…

By taking these steps and shifting from traditional hiring to a more intentional, data-driven approach, your organization can significantly reduce turnover, improve team performance, and build a workforce that thrives long term.

Cheers,       
The Instill Team